Project developers could lose $2.6 billion by 2030 while the voluntary carbon market (VCM) may also lose 4.8 GT of carbon credits due to verification delays, according to a report by Thallo.

Climate tech start-up Thallo uses blockchain technology to democratize the carbon markets, making it easier for buyers and sellers of carbon credits to find each other.

The company published a report that combines carbon project developer insights and identifies challenges to scaling the VCM.

Its report called “Fast Forward, Challenges to Scaling the Voluntary Carbon Market” identifies key bottlenecks including:

verification delays,
limited access to early-stage financing, and
inefficiencies in the value chain caused by intermediaries.

The report also presents solutions for scaling the VCM. And that particularly includes improved financing through forward models.

Here are the key findings from Thallo’s report:

The biggest bottlenecks involve the registries and validation & verification bodies (VVBs), as well as the GHG crediting programs.

Verification delays can cost VCM project developers as much as $2.6 billion. This will also cost the planet 4.8 gigatonnes of un-deployed carbon credits by 2030 as shown in the chart below.

That corresponds to not offsetting 37 million U.S. citizens by the end of the decade.

Carbon crediting programs argue that there are too few VVBs vs. the number of projects.

One solution to this problem as stated in the report is to scale up crediting programs by adding a workforce to match the demand. This is what Verra and Gold Standard are doing.

They create a specific team to improve the technical capacities of VVBs and national accreditation entities by:

dedicated training,
tightening review of projects by pushing back earlier on poor quality projects, and
working more collaboratively with accreditation entities.

By resolving and cutting project verification delays in VCM, the speed of carbon credit issuance can double.

Financing is a barrier.

There are three categories of carbon project developers – big & experienced, intermediate, and small & new.

Small to midsize project developers face the greatest financing challenges. Meanwhile, the big and experienced ones like South Pole find fundraising, not a real challenge.

Among the five different financing methods, the most common ways are forward purchase agreements and own funding. But each method has its challenges and benefits as to how developers see it.

90% of project developers agree that forward products will be key to scaling the VCM.

Intermediaries’ and investors’ profits account for ⅓ of VCM value in 2021.

With 500 million carbon credits traded in 2021, $650 million went to the pockets of investors and brokers – not project developers.

That accounts for one-third of the revenues the VCM generated in 2021.

In a best-case scenario, project developers sell directly to end buyers without the need for an intermediary. In this case, up to 60% of revenues goes back to the climate or local communities for long-lasting impact.

But under a worst-case scenario, brokers can take as much as 78% of the revenues of the carbon credit sales.

So, why do project developers still work with brokers? Some believe that they help connect with buyers and it’s convenient for price discovery.

On the other hand, a well-functioning carbon exchange offers good value to developers by:

Connecting buyers and sellers without taking large fees
Giving clear price signals, and
Providing transparency around the quality of credits

Forward Models to Scale VCM

Thallo’s report also explores forward models as one way that can help scale the VCM. In particular, it looks into forward financing used by registries like Verra and Gold Standard.

In VCM, forwards are more significant than futures to make project development go faster.

Since carbon projects are different, it’s hard to have standardized futures contracts. Futures contracts are traded on exchanges such as ICE and CBL. Most of them have vintages in the past.

On the contrary, a future contract is an arrangement that is made over-the-counter (OTC) and settles just once at the end of the contract.

Forward contracts can be closed earlier in the life cycle of a carbon project. This enables much-needed financial support to early-stage projects.

The volume of forward transactions rose by 65% from 2020 to 2021.

Web3 projects such as Ivy Protocol, Carb0n.fi, and Flowcarbon are developing standardized platforms for forward models.

For the small and midsize project developer, Thallo has the following proposal for a focused forward model:

The Fast Forward VCM report includes inputs from over 30 players in the VCM.

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Concerts produce waste and carbon emissions and are generally not good for the planet. Musicians have fought back by going carbon neutral or net zero to balance the scales.

Artists are lowering their carbon footprints and buying carbon credits to make up the unavoidable emissions for as much as $200 per ton.

From Coldplay to Pearl Jam and John Jackson and Billie Eilish, artists are working together with nonprofits to help lower their carbon footprint and make concert tours carbon-neutral.

Carbon Footprint of a Concert Tour

Millions of fans flock to concerts and festivals during summers when the weather is great to enjoy live music. But experts say that these shows can also harm the earth.

That’s because both artists and concertgoers travel, either by land or by air which emits a lot of CO2. Also, promoting albums and performing live around the world means musicians and their entourage fly a lot.

Then there are the emissions from tour buses, from moving sets, and from making concert merchandise. Not to mention the energy needed to power the venue, for things like sound and lighting.

A study of the five artists’ tour via an online carbon-tracking tool revealed that they released over 19 metric tons of CO2 during music festivals.

Meanwhile, recent estimates suggest that a live concert emits 405,000 tonnes of GHG emissions in the UK each year.

Here’s the breakdown of concert tours’ carbon footprint.

A report released in 2021 by the United Kingdom-based Tyndall Centre for Climate Change Research said music industry stakeholders can help significantly slash tour-related emissions by monitoring transportation and energy use.

One of the report’s authors noted that:

“It’s important for artists to consider sustainability options in show design, tour routes and transportation from the early stages of creating a tour — rather than bringing someone in to ‘green’ what you already planned.”

How Musicians are Making a Difference

Fighting climate change is happening across various sectors and it’s no different for top musicians, who are criticized for the carbon footprint of their world concert tours.

But a growing wave of musicians are stepping up and making climate pledges to achieve carbon neutral shows.

Some artists are opting for rail travel versus airplanes, stage designers are going for LED displays versus conventional lighting.

Moreover, promoters urge fans to carpool or take public transit to venues. Some music festivals have even tried bundling up entrance tickets with public transit fares.

More remarkably, singers and bands are now working with nonprofit organizations and venues where they perform to ensure their shows reduce the music industry’s footprint.

Musicians seek guidance from experts who can organize sustainability initiatives to make their events eco-friendly.

An example is REVERB, a non-profit organization that acts as greening techs for live concert shows.

The group ensures sustainability measures are in place during the event. For instance, they work with venues to secure reusable products used by concertgoers.

The organization works with tours to empower fans, too. At each show they handle, the group sets up “eco-villages” where fans interact with their volunteers to know how they can make a positive impact.

And that includes using the free water refill stations and reducing single-use plastic bottles. These measures lower both plastic waste and carbon emissions.

To date, the organization has eliminated over 4 million single-use bottles at concert tours. They were also able to reduce emissions amounting to 300,000 tons of CO2. That’s equivalent to avoiding the footprint of 3 million pounds of burned coal.

That achievement involves the high ranks of musicians and bands making climate pledges.

Reducing and Offsetting Footprint

Jack Johnson has been aiming for a carbon-neutral show through a reusable pint-cup program and water refilling stations in his concerts. He’s also into carbon offsetting where $2 from each concert ticket goes toward offset projects.

Another pop culture icon Billie Eilish is also taking the same climate action to cut her tour’s carbon footprint. Besides cutting plastic waste and emissions, her tour venues feature plant-based food options with a lower carbon footprint.

For bands, efforts are even grander.

Coldplay, for instance, leverages an app technology that logs fans’ mode of transportation to their concerts. Those who opt for carpooling, using an electric car or taking public transit get a discount on the band’s merchandise.

Then after shows, the band assesses the logged data from fans and plans to offset their footprint. For example, they plant a tree for each ticket bought by a fan.

Perhaps nothing can beat what Pearl Jam has been doing to tackle its carbon emissions.

The legendary grunge band began offsetting its world tours’ emissions in 2003, and since then, they made investments of over $1 million dollars in carbon credits to offset emissions from touring.

In fact, Pearl Jam committed to buy carbon credits for $200 per ton for its Gigaton tour. Globally, the price for carbon offset varies, ranging from $1-15 per ton.

Projects supported by carbon credits run the gamut from sustainable fuels to rainforest protection to renewable energy sources.

By doing all they can to reduce their tours’ carbon footprint, musicians hope to influence their fans even long after their concert ends. That is to continue investing their effort and money in carbon-reducing events.

Even the concert companies Live Nation and Big Concerts, both have sustainability goals. The whole music industry seems to be onboard a net zero path. In December 2021, three major record labels (Warner, Sony, and Universal) and several independents signed the Music Climate Pact. Their pact aims to reduce greenhouse gas emissions to net zero by 2050, and to achieve a 50 per cent reduction by 2030.

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AirCarbon Exchange (ACX) inks a deal with C-Quest Capital (CQC) for the first-ever auction of carbon credits worth 300,000 generated from LED light bulb projects.

Singapore-based ACX is the world’s first carbon negative digital exchange platform for airlines to trade carbon credits. It’s using the distributed ledger technology of a traditional commodities trading system while leveraging blockchain to create securitized carbon credits.

Washington-based CQC is one of the top project developers that seeks to transform the lives of families in poor communities.

CQC creates high impact carbon credits under 3 platforms:

Cleaner cooking,
Sustainable energy, and
Efficient lighting.

The deal will leave a significant mark on the role of auctions in the carbon market.

ACX was named Environmental Finance’s Best Carbon Exchange for 2022, while CQC won the Best Project Developer for Energy Efficiency.

The partnership between the two firms will create the first-ever LED bulb carbon credits.

What are LED Carbon Credits?

As the name says, LED carbon credits are from projects that use LED light bulbs instead of incandescent lamps. The corresponding carbon offsets are based on the reduced energy use of the LED bulb over its lifetime.

Replacing incandescent or gas-discharge-based lamps with solid-state lighting (LED) is the most successful approach to curbing CO2 emissions from public and private lighting, according to the International Society of Optical Engineering.

Lighting accounts for a significant share of total electric power consumption worldwide.

How LED can offset carbon emissions?

According to the U.S. Department of Energy, use of LEDs in the U.S. by 2027 can save about 348 terawatt hours of electricity. That’s in comparison with the consumption of electricity without using LED bulbs.

Also, saving even 1 kilowatt hour of electricity prevents about a pound of CO2 from entering the atmosphere.

That is equal to a reduction of 320 billion pounds or 160 million tons of CO2 emissions in the U.S.

The ACX and CQC LED Project

The LED carbon credits for auction by ACX will be from the Efficient Lighting projects of CQC in India.

There are 14.5 million inefficient incandescent bulbs replaced by efficient and long-lasting LEDs in about 3 million households.

The project recipients are in the most rural and poorest areas in India. It benefits the local residents with cheaper lighting, energy efficiency, and higher quality lighting.

The more efficient LED bulbs also make studying and working at home much easier.

CQC certifies the project and verifies the carbon credits under Verra’s methodology AMS-II.C. or the Efficient Lighting Technologies.

The project also offers co-benefits and qualifies for 7 of the United Nations Sustainable Development Goals.

CQC performs robust audits and checks to ensure best practice and quality. The firm provides a 3-year warranty compared to the standard 1-year available in the market.

Each household is also given a unique ID to avoid the issue of double counting using cloud data management to track the use of LED lighting.

Doing all these are vital for project evaluation, verification, and improvement.

This LED project offers two-fold benefits:

Local people in rural areas will enjoy big savings from reduced electricity bills and access to efficient and quality lighting
The whole nation benefits from the significant reduction in energy consumption due to massive switchover to LED

Shifting to energy-efficient lighting will decrease the energy load on a grid system that largely relies on coal.

In turn, this also lowers India’s carbon emissions while reducing its dependence on coal as it invests in cleaner energy sources and seeks to have 500 GW of renewables by 2030.

The newest auction for LED carbon credits from CQC Indian project is part of the goal of ACX to bring more awareness about carbon projects. It comes after the Exchange’s successful auction of micro-mobility credits from a bike sharing scheme in Rio de Janeiro, Brazil.

The LED carbon credits auction will be this coming November 1 and 2, 2022.

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This November, government officials, business people, and activists alike will come together in Egypt for the 27th United Nations Climate Change Conference, also known as COP27 – short for Conference of the Parties 27.

The “Parties” referred to in that name are the signatories of the United Nations Framework Convention of Climate Change, which was first established in 1992 at the Earth Summit in Rio de Janeiro.

With all United Nations member states counted amongst its number, UNFCCC membership includes nearly every nation on Earth, including observers like Palestine and the Vatican.

The only entities that aren’t parties to the UNFCCC are unrecognized states like Kosovo, and most notably, Taiwan.

30 years have passed since the UNFCCC was first established. In the time since, what’s been accomplished, and what hasn’t? What will be discussed at COP27, and where will the world go from there?

To answer all these questions and more, let’s step back in time for a summary of how we ended up where we are, outlining a brief history of climate change.

Early Warnings Were Largely Ignored

One of the earliest scientists to foresee the potential impact of man-made climate change was Swedish scientist and Nobel laureate Svante Arrhenius.

A noted chemist of the late 19th and early 20th century, Arrhenius was the first to realize and calculate the impact of atmospheric CO2 on global temperatures – what we now know as the greenhouse effect.

Newspaper articles from the turn of the century. Source: The Selma Morning Times, 1902; Rodney and Otamatea Times, 1912

The picture to the above left was taken from an article in a newspaper from 1902 and highlights Arrhenius’s original conclusion based on his calculations. The picture to the above right comes from a later article in 1912, first published in an issue of Popular Mechanics.

As you can probably guess, nothing really resulted from these early warnings. The blame for that, however, wasn’t entirely due to willful ignorance or profit-driven motivations.

Simply put, +100 years ago, there was far less CO2 being emitted into the atmosphere than there is today:

With the amount of greenhouse gases (GHGs) emissions on an annual basis worldwide at the turn of the 20th century, scientists calculated that it would be several hundred years before these emissions would start to affect the global climate significantly.

What they couldn’t predict, however, was just how quickly the pace of carbon emissions would accelerate.

A century later, CO2 emissions would already be over 13 times what they were when Arrhenius first made his calculations. And accordingly, the several hundred years’ worth of leeway mankind was thought to have would be dramatically reduced.

The Beginnings of Climate Awareness

It would take another half century for scientists to once again bring CO2 emissions to the table.

This time, they would be able to point to a steady rise in atmospheric CO2 levels. They’ll also bring other newfound knowledge, such as the fact that the ocean was less capable of absorbing CO2 than previously thought.

During a special event held on the 100-year anniversary of the American oil industry in 1959, scientist Edward Teller, father of the hydrogen bomb, had some prescient words to share with the several hundred oil tycoons, government representatives, and other scientists in attendance:

“At present the carbon dioxide in the atmosphere has risen by 2 percent over normal. By 1970, it will be perhaps 4 percent, by 1980, 8 percent, by 1990, 16 percent, if we keep on with our exponential rise in the use of purely conventional fuels.

By that time, there will be a serious additional impediment for the radiation leaving the earth. Our planet will get a little warmer. It is hard to say whether it will be two degrees Fahrenheit or only one or five.

But when the temperature does rise by a few degrees over the whole globe, there is a possibility that the icecaps will start melting and the level of the oceans will begin to rise. Well, I don’t know whether they will cover the Empire State Building or not, but anyone can calculate it by looking at the map and noting that the icecaps over Greenland and over Antarctica are perhaps five thousand feet thick.”

There was a little bit of fearmongering in Teller’s statement.

Today, we know that if all the icecaps were to melt, the resulting sea level rise would be around 60-70 meters – a far cry from being able to cover the Empire State Building, which sits at 443 meters.

However, just about all of Manhattan and Brooklyn would sit underwater:

A remarkably accurate rendition of what New York would look like if all the icecaps melted. Source: A.I. Artificial Intelligence, 2001

Last year, the world lost 1.2 trillion tons of ice, and the pace at which it’s melting is only accelerating.

The COP26 in Glasgow last year marked the most important event in the history of tackling climate change. It forces organizations and individuals to take emissions reduction to heart.

But let’s leave all that aside for the moment and return to our history lesson on climate change.

Throughout the 60s, many more scientists would come forth with new calculations and warnings about the impacts of CO2 emissions on global temperatures.

In 1969, NATO would become the first entity to attempt to deal with climate change internationally. And while their efforts wouldn’t be very successful, it would mark the start of government regulation aimed at reducing emissions in countries such as Germany.

In the 70s, some anomalously colder weather in conjunction with worries that manmade particulate emissions (smog etc.) were causing a cooling effect resulted in confusion over whether humans were causing the world to heat or cool.

The general scientific consensus was that the evidence was inconclusive and more data was necessary.

But the mainstream media latched onto those few minority scientists who expected imminent global cooling following a series of particularly cold winters in Asia and North America.

This sensationalist reporting would damage the public perception of climate science as it became clear by the 80s that carbon emissions would rapidly outpace particulate emissions. Add to this that the minor global cooling trend of years prior had been reversed.

The First Big Environmental Win – The Montreal Protocol

As a scientific consensus over global warming began to form through the 80s, one of the largest and most coordinated first efforts taken to protect the environment was the regulation and banning of chlorofluorocarbons (CFCs).

Previously commonly used as refrigerants and propellants, CFCs were discovered to play a serious role in the depletion of the ozone layer.

The ozone layer is, as its name suggests, a layer of ozone particles surrounding the earth in the upper reaches of its atmosphere. It plays an important role in preventing harmful ultraviolet radiation – the same kind that causes sunburns and skin cancer – from reaching the earth’s surface.

While only tangentially related to climate change, the depletion of the ozone layer may pose considerable danger. It causes increased cancer risks and other harmful effects to plants and animals alike.

The largest visible indicator of ozone depletion was the ozone “hole”, an area of significantly depleted ozone detected above the South Pole. At its lowest point, ozone levels in the Antarctic were up to 70% lower than they were before 1980.

The largest hole detected over the South Pole as of 2006. Source: NASA

The Montreal Protocol was established in 1987 and entered into force in 1989. It has since managed to reverse that trend, a huge achievement recorded on the environmental front. 

The Protocol has allowed the ozone layer above the South Pole to begin recovering by agreeing to phase out and later ban ozone-harming substances like CFCs and HCFCs.

NASA has since estimated that the ozone hole will be able to return to pre-1980 levels by around 2075. This makes the Montreal Protocol as the first major international success in the history of mitigating climate change.

It was also notable for just how quickly it was implemented – it only took 14 years from when the ozone hole was first discovered in 1973 to the agreement being passed in 1987.

Part 2 with an overview of all of the COPs will be released shortly…

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